Cryptocurrency hedge funds had a stellar year in 2019, as assets under management (AUM) saw a 50 percent increase across the market.
Crypto Hedge-Funds: Total AUM Climbs to 2 Billion Dollars
The findings were shown in a research report published by global auditing and consulting firm PricewaterhouseCoopers (PwC) and British financial services firm Elwood Asset Management Services Ltd.
Per the report, 97 percent of crypto funds traded in Bitcoin. Sixty-seven percent of fund managers went on to trade in top altcoin Ether, while XRP, Litecoin, Bitcoin Cash, and EOS rounded out the top assets with 38 percent, 38 percent, 31 percent, and 25 percent respectively.
It’s worth noting that the companies’ research was based on data gotten from fund managers in the crypto space. However, while there has been an unprecedented rise in the value of assets under management for crypto hedge funds, it also showed that only a few leading hedge funds manage a huge portion of the AUM.
Per the report, the total AUM climbed to more than $2 billion at the end of 2019. This is up from $1 billion reported at the end of 2018. Meanwhile, the average holdings per company went from a record $21.9 million to $44 million – an increase of well over 100 percent.
Furthermore, funds that used a discretionary long-only strategy had the best median performance at 40 percent and an average 42 percent gain. Funds that used a discretionary long/short approach didn’t do badly either, as they recorded a 33 percent rise in both average and median gain. Multi-strategy funds, meanwhile, recorded a median growth of 15 percent.
Quantitative funds witnessed a 30 percent median growth, and a 58 percent gain average. The 28 percentage point contrast between these two figures implies that they had outsized outperformers in the mix.
The report is coming in a year when Bitcoin itself saw a significant jump too. Bitcoin’s price soared by an impressive 95 percent last year, moving from about $3,693 to $7,195 through the year. The market did rather well, so it’s only right that investors in it do just as well.
PwC global crypto partner Henri Arslanian explained that the volatility witnessed by the crypto market provided crypto quant funds with a lot of trading opportunities. Expatiating, he added, “The performance of crypto quant funds tends to be more linked with market volatility rather than market performance.”
Crypto Influence Attracts Institutional Attention
Hedge funds aren’t the only investors that made banks from Bitcoin’s solid 2019. Despite the fact that cryptocurrencies have had their own fair share of naysayers over the years, even institutional interest in the asset class has started to grow as a result of Bitcoin’s impressive year.
As for speculations, Arslanian believes that this will only grow in the future. He maintains that crypto hedge funds are the easiest way for traditional investors who are looking to start transacting in the crypto sphere, and as interest in the asset class grows, hedge funds will see significant gains in AUM as well.